In the United Kingdom, the United States and elsewhere, Millennials and Gen Z are emerging as the core consumer base of the cruise industry, driving the sector's post-pandemic recovery. The cruise industry, which took a direct hit when operations were halted during the COVID-19 outbreak due to infection fears, has sustained a strong rebound since last year on the back of an influx of younger passengers.
According to the Financial Times (FT) on the 13th (local time), the cruise industry rolled out distinctive programs such as "cruises to nowhere" that stay at sea and return in order to break out of sluggish sales during the pandemic. This helped build a favorable perception of cruising among some younger people. And after the endemic, package programs combining low prices, convenience and a variety of amenities appeared, significantly changing the existing image that "cruise travelers are older." According to the Association of British Travel Agents (ABTA), among those aged 25 to 34, the share who took a cruise in the past year rose from "fewer than 1 in 20" in 2019 to "1 in 5" recently.
Major operators strengthened strategies aimed at younger customers. Operator Royal Caribbean pushed a revamp of its digital booking system, deployment of ultra-large new ships and expansion of short-haul routes, which translated into improved results. Royal Caribbean's corporate value is about $70 billion (about 100 trillion won), more than double its pre-pandemic level, and far ahead of rivals Carnival and Norwegian. All three companies raised their revenue outlooks for this year.
The biggest factor drawing in younger travelers is "value for money." While hotel and resort rates rose quickly after the pandemic, cruise fares remained relatively low, and the perception spread that you can "experience multiple cities for the same money." Labor structures also contributed to expense savings. Cruise lines broadly hired workers from lower-income countries such as the Philippines and Indonesia, allowing them to partially avoid wage inflation in the United States and Europe. Analysts said this became the basis for maintaining service quality even after the pandemic.
Operators are also expanding investment in "private islands," dedicated islands that cruise lines own or lease long term. Royal Caribbean's "CocoCay" posted high profitability, and Carnival and Norwegian are rushing to develop dedicated destinations. Because they can secure onshore revenue without bearing port fees, these become stable revenue sources for the lines. Some also see these dedicated destinations as potentially dispersing the overcongestion of existing popular tourist spots.
Uncertainty remains, however. U.S. travel agencies recently reported a temporary softening in bookings and analyzed that inflation, government shutdowns and hurricane impacts spurred a slowdown in spending. The trend of operators pushing ticket price increases could also negatively affect consumers feeling inflation pressures. The fact that Royal Caribbean's share price pulled back after earnings because results fell short of expectations was also cited as a warning sign.
Even so, the industry still sees ample room for growth. High loyalty among younger generations and the small share of cruises in the overall travel market also support expansion potential. However, experts noted that "pricing power is currently weakening across the leisure market," warning that excessive price hikes could undermine new demand.